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Building Customer Loyalty through Email Marketing

White Paper

This top-downloaded strategy guide examines some key elements of customer loyalty using a mix of dotmailer clients' experience, the very latest best practices and industry analytics. Supported by case studies from industry leading brands, this step by step this guide will show you through all aspects of email marketing, from integrating social media to getting buy in from senior management. Download now to learn how successfully build customer loyalty through your email marketing.

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Customer loyalty and how
you measure it

The traditional definition
of customer loyalty is a
financial one – your most
loyal customers are clearly
those who keep returning to
do business with you.

But loyalty in the digital
world has much wider
implications.

There is no standard industry
metric to define a loyal
customer

For some organizations it can be the bald metric of how
frequently their customers do business with them. For
others, such as online retailers, it is also a measure of
how often customers share favorable reviews or feedback
on the organization or brand. Others view loyalty as
customers simply being open to receiving marketing
communications.

However, there are standard metrics for measuring
customer satisfaction, generally on a scale of 1-5, with 4.5
or above being taken as “completely satisfied.”

The most sophisticated marketers use these ratings to
shape the content of email campaigns, with different
messages going to different groups or indviduals,
depending on their loyalty markers.

Except in a few rare instances, complete customer satisfaction
is the key to securing customer loyalty and generating superior
long-term financial performance. Totally satisfying the members
of the targeted customer group should be a top priority.

- Harvard’s report “Why Satisfied Customers Defect”

Customer satisfaction
vs loyalty

There is an area of misconception around the relationship
between customer satisfaction and customer loyalty.
Harvard Business School is widely recognized as a
leading source of business knowledge, and sums up
the relationship between loyalty and satisfaction. At its
simplest, Harvard researchers point out that unless you
have satisfied customers you have no chance of making
them loyal.

As long ago as 1995 Harvard were analyzing the
relationship between customer satisfaction and loyalty,
and every year since, have reported that the reason many
companies fail to drive loyalty and satisfaction higher is
that they don’t take all the factors that drive a purchase
decision into account when using tactics to try and
improve customer loyalty.
So at the heart of any loyalty campaign lies the need to
raise customer satisfaction to levels of ‘complete’. This
objective has implications right across a business and
impinges on every touchpoint between the customer and
the organization.

Business buy-in

Spreading the word about the importance of customer
satisfaction across the enterprise needs senior buyin
- right from the very top - and an absolute focus on
delivering the best possible customer experience from
every person in that business.

There are many organizations in which customer
satisfaction is right at the top of the corporate agenda.
These rank among some of the most successful users of
email as a marketing and customer loyalty tool.

Our annual industry benchmark report, “Hitting the Mark”,
shows how companies like House of Fraser, Sainsbury’s,
M&S, Boots, Apple and Macys have built impressive
loyalty programs using email to drive traffic to websites
and encourage signups for rewards and incentives to build
customer loyalty.

Several dotMailer clients, like ODEON, SpicerHaart, Crystal
Palace FC, Help for Heroes, Dove Spa and Cabbages &
Roses, whose experiences are all detailed in this guide,
are enjoying strong customer loyalty and repeat business
through effective email campaigns.

In 2012 Dove Spa built an email database that captured the email address of
every person buying Strength Within, its latest anti-wrinkle supplement.

The supplement had proven results, but took 14 weeks to
show, and over two thirds of consumers only bought an
initial 4-week course.

Through a multilayered email marketing drip campaign
using dotMailer’s email marketing automation and CRM
integration, Dove Spa achieved a 78% repeat purchase rate
for the product – well over twice the industry average.

Why email marketing to
drive loyalty?

In the last decade or more, email has evolved from being
a blunt communications tool to the most popular and
effective method of direct customer communication.

According to figures from the DMA, over 3 billion marketing emails were
sent out last year by all kinds of organizations, from retail giants to local
charities, with average open rates of one in six across the entire industry.
With the rise of the smartphone, the intimacy of the relationship between
email and the recipient has grown ever further. And the results for online
retailers and digital marketers have been impressive.

One of the most effective uses of email communications is to build customer intimacy, trust and satisfaction.
These are the critical factors for creating loyalty, support, and ultimately advocacy from your customer base.

Email is the #1 activity on mobiles

From satisfaction to advocacy

Whether measured through standard
metrics or analysis of customer
reviews on sites, advocacy is the
Holy Grail of online relationships.

As the graphic shows, the best way to gauge the efficiency of a company’s
growth engine is to take the percentage of customers who are promoters
and subtract the percentage who are detractors. This equation is how we
calculate a Net Promoter Score for a company.

The challenge for most organizations is to raise the NPS by getting a
greater percentage of customers into the promoter group, and in this
respect regular communication through email, particularly if it is a twoway
engagement, will build a firm base from which to increase the quality
of their impression of you.

However, because email can be such an intimate medium, the way you
communicate will have a critical effect on the reaction you get, so needs
to be carefully considered, tested and trialled, to ensure that the messages
are appropriately targeted, composed and delivered.

Targeted success

There is no greater
copywriting challenge in
marketing than email.
Getting it right is a multifaceted
skill that starts with
the ability to capture the
reader’s undivided attention
in the subject line, and
carries through to the point
that the reader thinks it was
his or her bright idea to buy,
before they get to the end of
the email.

But there’s a lot more to successful loyalty building than
just compelling copy and content.
At the root of the success of any email campaign is a close
and detailed understanding of the target customer. Not
just in demographic terms, but in terms of the rich vein
of information that can be mined about their purchasing
patterns, engagement with email marketing and social
media, their browsing patterns and propensities, and their
preferences and choices online.

Knowing how to best time the mailing, understanding the
trigger points and voting points that impact response and
campaign ROI, all require a detailed analytical approach.

DHL Express is
the global market
leader in the
international
express courier
business, with a
parcel delivery
network spanning
more than 220 countries and
territories.

As Lori Folts, DHL’s Head of Marketing Communications for the
Americas, explains, working in a way that DHL describes as
‘Globally Local’ presents a complex challenge.
Lori’s region covers more than 40 countries in six main
languages (American English, Caribbean English, Usted, Brazilian,
Tu and Mexican, Caribbean French).

“We also customize the Spanish version to the various dialects
within the region”, explains Lori.
Lori’s team is responsible for delivering marketing campaigns
across the entire Americas region, from the southern tip of
Argentina in South America to Canada.

Defining an email
loyalty strategy

For many organizations the use of email has evolved over
time rather than starting as the core of a dedicated strategy
to build and maintain customer loyalty. We’re working on
the assumption that you’ve already built up a database
of contacts and customers with both contact and other
information you can use to drive your marketing.

But if this database has grown organically, as most organizations’ have, it’s a good idea to
define your answers to some key strategic questions before heading off down the track of
building a loyalty email campaign strategy.

Why do you want to use email to build loyalty?

How do you plan to use it?

What is in it for your customers?

How good is the data?

What do you need to do to improve it?

How well does the data match your key customer targets?

How are you going to differentiate between each group?

How do you plan to segment lists and content?

How well does your email platform integrate with customer systems?

How are you going to define and measure success?

As a guide for management – try and answer each of those questions in no more than two
paragraphs – you may find the exercise highly illuminating! The answers will highlight issues,
strengths and opportunities your business needs to plan for and resolve as a key part of your
loyalty building strategy.

Finally, you need to make sure that there is a business case that you can use to justify the
investment of marketing budget in creating and rolling out a comprehensive email campaign
approach, for which you will need a sophisticated email platform.

Building the conversation

The biggest difference between traditional marketing and
digital marketing is that you move from broadcasting
messages to opening up a dialogue directly between brand
and consumer

For a lot of marketers that’s a big change in mindset,
as many have been brought up being used to feedback
coming from market research and focus groups.

However today, if someone likes or dislikes your brand,
they will happily say so – and share their feelings with
the world around them, through social media, email and
mobile., which opens up huge opportunities for brands to
engage much more closely with their customers through
creating and continuing conversations.

As we’ll see in a later section of this document, a
great deal of this conversation building can in fact
be automated. But the key to successfully increasing
customer loyalty through email lies in the quality of the
conversation you and your customer enjoy.

Building a successful email conversation and finding what
will work best for you and your customers is a process of
continual evolution. While facilities like email campaign
split testing allow you to pre-test a random sample of
your mailing list with different subjects, content and
creative, real interaction comes from careful targeting of
messages and matching content to the recipient’s profile
and requirements.

When you are using email to build loyalty it’s important to
remember that the ultimate goal is to turn customers into
advocates, and the best way to achieve this is by giving
them a high-quality experience; across your products, your
service and your messaging.

It’s also important to remember that email can be a very
powerful way of re-engaging customers who have not
purchased or responded to any offers recently.

Loyal customers expect preferential treatment.
This could be, for example:

Upmarket fashion
and homewares
retailer Cabbages
& Roses does over
two-thirds of its
business online
and considers
effective customer
communication to
be one of its key
differentiators.

They were looking for a way
to not only expand on their
customer data, but to also
integrate their Magento-driven
store with dotMailer to create
a seamless and personalised
customer communication
journey

Holly Leigh-Harvey, Operations Director, comments, “by
integrating the data from Magento into dotMailer we
have been able to draw across all that information into
dotMailer, and segment it.”

This activity has been highly effective – Holly now has a
list of over 11,000 names of people interested in being
kept informed about their new products, special offers and
fashion news.

Bringing management and
other departments on board

One of the biggest
challenges that many
digital marketers face is
getting buy-in from senior
management to an email
customer loyalty program
that can call for a major
change in marketing strategy.

For many senior marketers, using email to build loyalty
is exciting, but untested territory. For those brought up
steeped in traditions of ‘The Way We’ve Always Done It’
the challenge can be even greater, because they are used
to tried and tested methods with known success rates.
To ease this part of the process you need to build an
effective business case – you may think it’s a no-brainer,
but a surprising number of CMOs still fail to see why email
should be any more effective than conventional media,
with many seeing it purely as a way to reduce postage
costs!

Email open and response rate metrics are strong grounds
in a business case.
Traditional direct mail response rates languish in the low
single figure percentages of 1-3%, and mass broadcast
marketing such as TV and press advertising can deliver
absolutely no response metric at all. By comparison the
DMA calculates the average open rate on emails as being
15% while most dotMailer customers report an average of
twice that amount.

The ability to show not just that the message has been
received, but also interacted with, is the most powerful
success metric for any marketing activity. Email offers
result in by far the deepest response rate analysis of any
marketing channel for any organization – right down to
contact level - both to generate new sales and increase
customer engagement and loyalty

Companies that prioritize the customer experience
generate 60% higher profits than their competitors.

There are some excellent research resources into the value
of email – Forrester in particular has researched the use
of email as a means of influencing purchases, with an
innovative experiment in association with US retail group
GSI where they ran a special day called ‘Cyber Monday’.
On this day each of the 15 members of the retail group
produced a range of online only offers for that day, and the
responses from people who purchased on that day along
with how they found out about the offer make a very
convincing case for using email.

The charts to the right show how ‘Cyber Monday’ results
compared with the big US shopping period for both hard
and soft goods. The Forrester figures show that roughly
twice as many people are motivated to purchase by email
as from searching

Another compelling argument is to look at the experiences
of your peers and competitors, which is why dotMailer’s
client case studies can form a key part of your business
case justification.

Using segmentation
to increase loyalty

Email marketing is unique as a channel in that it gives
marketers the ability to effectively market to an audience of
one, just many times over.

Understanding what is relevant to your customers in order
to create this one-to-one message means building and
maintaining sophisticated intelligence about them.

This has to go much deeper than just understanding ‘open’
and ‘click through’ rates. You need to track your customers’
buying behavior, levels and specifics of their engagement with
your marketing and your business, as well as demographic and
social profiles, to really understand and influence their loyalty
through your email marketing.

One outstanding example of a company using segmentation to effectively increase the attraction of its email
program is online retailer CabbagesandRoses.com
Operations Director Holly Leigh-Harvey explains: “By integrating our email and ecommerce systems we can
segment by spend over a specific period, by location and purchase type, and create very personalized promotions
that will appeal directly to those customers’ buying habits.

“We can also identify those who only buy when there’s a promotion on, and those who’ll buy at any time, as
well as those who respond to different types of offer. It really does deliver exceptional insight into our customer
base and we’re now beginning to see just how effective delivering such highly personalized campaigns can
actually be.”

Cabbages and Roses effectively automate this messaging by integrating their dotMailer email marketing with
their Magento ecommerce solution.
The success of marketing in this way is so great that Holly is hiring additional staff to focus entirely on this
aspect of ecommerce.

Automating the conversation

Email loyalty building is a journey, not a destination - and the
further along that journey your organization goes, the greater
your database of contacts will become and the greater your
requirements to send the right message to the right person at
the right time.

This is the point at which you’re going to need to let the
technology do the work for you by introducing email
marketing automation.

Email marketing automation calls for a set of rules and
triggers that ensure relevant messages are sent to the right
people at just the right time. You will need to understand
the customer journey and lifecycle in detail, their likely
interest points and triggers, so that you can map these in
advance and design the content and triggered emails in
order to ensure that they get timely, relevant content.

Clearly every business is different, but perhaps one of the
best ways to illustrate this approach in action is by looking
at estate agency group Spicerhaart. They use triggers and
email marketing automation to ensure they correctly send
timely messages to build their email marketing loyalty
program around the house buyer journey, using email to
cement loyalty and drive cross-sell.

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With over 250 branches, the group has developed a
sophisticated customer database which is used to drive
email marketing automation using dotMailer, to support
its clients’ journey through the seeking, acquisition,
purchase and moving stages of house buying.

Spicerhaart’s iMarketing Manager, Matt Dale, explains. “We
start with a welcome email when someone signs up. This is
normally when they request property details through one
of the portals, such as RightMove, so we have their address
and contact information, and a rough profile of their
property needs. Each email is tailored and comes from the
individual branch manager, so from the outset we start to
build a personal relationship.”

This is a hugely effective approach to email lifecycle
marketing, and plays a key part in building customer
loyalty and trust.
Whichever approach you use, it is critical to capture as
much relevant data as possible to help inform future
segmentation decisions and ensure that every email you
send will encourage loyalty rather than deter it.
Remember, loyalty is like reputation – hard-earned but
easily lost.

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dotMailer client, Spicerhaart,
operates a network of estate
agencies, with several distinct
brands

One of the most important aspects that it set
out to achieve was to make the email feel highly
individual, so each one is branded with the
specific agency that the applicant first contacted
and is signed by the local branch manager.

Because the whole process is fully automated,
over 90% of the emails are triggered by an
applicant’s actions, as Spicerhaart’s iMarketing
Manager, Matt Dale, explains: “Once an applicant
has registered, we keep track of which properties they have viewed and
use that information to ensure they receive priority notifications when
we take on a new instruction. Each of the individual property details that
we send out has links to the properties on the website, so we can then
monitor open and click rates to see what is attracting their interest and
use this information to tailor other send outs.”

“Because the email marketing campaigns are designed to help improve
customer service, the process doesn’t end when a customer makes an offer but moves into an
added value phase designed to provide support with critical decisions, such as finding legal services
and mortgages, moving on to setting up utility contracts, identifying and managing removals once
contracts are exchanged, then completing the sale.”

“At the end of the process of course we’ll also do a ‘welcome to your new home’ mail, and run a
satisfaction survey to get their feedback on how well we were able to help,” Matt comments.
“We’re also keen to get customer quotes, both on Facebook and our own sites, and encourage
them to get their friends to use us, with vouchers for introductions. Email is a great way to help
generate that kind of user-driven content.”

#For many online retailers, email marketing
to cross-sell, based on customer behavior, is
relatively straightforward.
But for ODEON cinemas, the challenge is far more complex

The current total Première membership of 2+ million means a great deal
of transactional data to store and mine in order for ODEON to turn those
transactional and behavioral patterns into targeted customer segments for
data-driven email marketing.

But being able to create and target purchase behavior-based segments in
this way is critical for ODEON to maximise cross-sell from their loyalty
scheme membership base and send highly relevant email messages that
will build and maintain reader engagement.

Chris Boddice, who heads up ODEON’s CRM and Digital teams, comments,
“Working out how to predict likely interest in movies based on previous
attendance is something of an art.”

“It’s fairly predictable that customers who enjoy Bond films will also enjoy
Jason Bourne, and Mission Impossible, but what we want to do is to find
out the other movie types that those who went to see those films also
enjoy, then use that information to suggest films that others might find
worth trying. And our experience has been that the combination of films
is as important as the type of film.”

Chris is particularly excited about the introduction of 3D movies like
Gravity featuring Sandra Bullock and George Clooney. “This is one film
that you just have to see in 3D.”

“It’s one of those great chances to promote to a very wide range of
audiences with subtly different messages,” he continues. “So we can mail
people who have been to 3D movies before with a ‘…you are sooo going
to enjoy this…’ message. We can also email people who enjoy sci-fi movies
but haven’t seen a 3D film with a ‘...if you’ve never tried 3D, now’s the
time…’ message, and so on. The key is that the nuancing of the copy makes
the email feel really personal.”

Capturing email addresses

However good your eCRM system, the one thing that will trip
it up is if you fail to collect email addresses, and particularly
the permission of the people whose contact details you
collect, to send them email.

Capturing email addresses online via a website is relatively
easy.

For those with a retail operation, or for whom there can
be many pre-sales contacts before a sale is closed, more
creative ways of getting people to part with their details
are needed.

For the majority of retailers including major supermarkets,
capturing email addresses at point of sale remains a
low priority. They rely on loyalty cards, often referring
customers to register online in return for distinct benefits
such as vouchers and special offers. However getting
accurate email addresses at point of sale has proven
difficult for many retailers – counter staff are often dealing
with queues of customers, so the additional minute it
takes to get a customer to give up and capture that
information can result in unacceptably long delays.

Only among a few retailers has it become standard
practice for staff to try to capture email addresses at the
point of sale. Some print out competition entry forms
that offer customers the chance to win vouchers or other
incentives.

Others drive all email capture through their loyalty
programs, but the majority still rely predominantly on
email capture online.

For B2B organizations, email capture can be tricky, unless
there is a definite incentive, such as access to a report
or to specific information that is not otherwise publicly
available. Many organizations produce thought leadership
documents, such as strategy guides and whitepapers,
requiring website visitors to sign up with their email
address and permission to use it, in order to access the
value-added content.

Whatever route you choose, remember that people will
not readily give up an email address, together with the
opportunity for you to further market to them, without
some tangible incentive to do so.
Some organizations actually offer cash or goods to a
specific value incentive. Loyalty schemes regularly dish out
20,000 points to an individual just for signing up. But the
redemption rate of these schemes is so low that in reality
very few people ever realize the value.

It’s important to keep the value of the email address in
mind when pitching loyalty rewards for signing up, which
brings us neatly to our next question…

The dotMailer team
helped to drive
increased awareness
and interaction with
fans on a personal
level, involving a
video of the club’s
cheerleaders – The
Crystals.

This was promoted on YouTube
with a competition to generate
shares and email addresses, with the
winner being given the chance to star in the next Crystals
video, and to win an iPad.
With just under 3500 registrations from the video alone,
and 3774 signups to their newsletter off the back of the
two viral campaigns, the Crystal Palace database was
dramatically increased.

Having built its list to the point where there are now over
76,000 active members, and having added the ability
to effectively segment data, Mike Sinnerton, the club’s
Assistant Communications Manager, is pleased to report
that the club is now making maximum use of email. “In
January 2013, we sent out over 400,000 different mails. We
couldn’t have even dreamed of doing that just 18 months
ago.”

How much is an email
address worth?

Before setting out on an email address acquisition campaign,
it is important to bear in mind the likely value to your
organization of an email address. In a recent relevancy group
executive survey of 402 email marketing execs, just 32%
stated they know the value of their email addresses.

Returning customers spend on average 67% more
than first-time customers.

- Bain & Company

The DMA calculates that the average email address value
is around £10/$16US, but in reality the value of each
email address will differ significantly not just from one
business to another, but also between types of address and
their sources.

There will be some demographics that are of higher
value than others, so arguably it is worth spending more
to acquire emails that match a particular profile that
you have found represents higher net value customers.
However the discipline of dividing your digital revenue by
the number of subscribers helps to ensure that you don’t
overpay for email address acquisition.

A widely used formula is to divide the revenue generated
from your email marketing program over a fixed period,
by the average number of people on your list across that
same time.

On the basis of 100,000 email addresses that generate half
a million pounds of revenue, then the calculation works
out as follows:

[Table or chart in PDF file - Register or sign in to view]

t can be argued that you can increase the value of each
email address by considering a ‘lifetime’ value based on the
number of years that a customer stays with you, but most
organizations find it more straightforward to stick with an
annual value.
This is an important consideration when looking at loyalty
programs – unless loyalty can be translated into hard cash,
it becomes very difficult to justify expenditure on building
loyalty programs.

Data integration – connecting
your email marketing to
your CRM data

Critical to the success of your email program is an effective
integration between your email marketing and your CRM
system.

Effective integration allows you to automate laborious
data tasks, to give you a single up-to-date view of your
customers’ engagement with your organization, and to
enable data-driven targeting and automation.

Currently the market is well served for CRM applications
but not all are capable of answering the full range of needs
that most companies now have. The increasing amount
of information and segmentation that can be captured,
from social media interaction to web behavior to purchase
data, means that databases need to be scalable, robust and
flexible.

Currently cloud-based CRM, analytic, and ecommerce
applications are proving their value as companies move
away from on-site dedicated servers. Among these, the
ones we find our customers choosing with by far the
greatest frequency are:

Whatever email service provider you choose, it is critical
to ensure that it offers seamless integration with your
CRM and ecommerce systems.

Increased
efficiency
and reduced
cost

The charity Help For Heroes was
one of the earliest adopters of
dotMailer’s Microsoft Dynamics
connector because the charity
needed to turn email from a
broadcasting tool into a means of
precisely targeting specific messages to
relevant supporters.

“MS Dynamics gives us an almost
unlimited ability to segment
information, which has a dramatic
effect on the impact of e-shots,”
comments Ben Henson, Change
Manager (IT) at Help for Heroes. “For example, if one of our
supporters was doing a Land’s End to John o’Groats cycle ride, in the
past we’d have only been able to email information about this to
the whole mailing list. “

“Now we can target those people who we know are close to the
route, and even use different copy to appeal to those who might
be tempted to sign up and ride along for a portion of the journey,
from those who will just come along, cheer the riders on and make
a donation.”

“Being able to refine mailings not just by content but by targeting
them directly towards those people we know are most likely to
respond is going to have a profoundly beneficial effect on the
success of email,” Ben comments. “Linking MS Dynamics and
dotMailer offers huge potential for streamlining our operations and
reducing costs.”

Mobile optimization – making
your content work on any
device

In the last year m-commerce has shown a startling growth
rate of over 68%, with different surveys all pointing to the
fact that the second screen - smart phones and tablets - is
set to become the primary method of digital interaction
between consumers, brands and each other.

At the beginning of 2013 MINTEL released its Annual
Retail Predictions Report in which it charted the rise of
m-commerce. This showed that whereas in 2009 just
4% of people bought one or more of their gifts online,
by the end of 2012 – just three years later – that
figure had risen to 84% of respondents.

In September 2013, e-Marketer reported that mobile
commerce is set to grow to the point of accounting for
16% of total ecommerce sales.
Whereas it was seen until fairly recently as a
‘Generation Y’ activity, mobile communication is now
totally cross-generational.

While the general consensus is that the average
smartphone user checks their email six times per day,
anyone who is an ‘agile worker’ will know that six
times per hour – or whenever a message pops in is a
more likely metric!

It costs 5 times more to acquire new customers
than it does to keep current ones.

- Forresters Research

This chart shows the split between platforms used by
people receiving marketing emails sent by dotMailer’s
marketing team. Here, even in a B2B marketing
environment, the once all-dominant Outlook now
accounts for just 64% of email opens, with a quarter of all
email opens taking place on mobile devices – either in or
outside of the office.

The key point to remember is that whether your
organization is focused on B2C or B2B marketing, there
is a growing chance that your email won’t be read on a
desktop or laptop PC, but on a mobile device.

So you need to make sure that your message is correctly
optimized to ensure that whichever device it is received
on, the user is able to see and read the message easily, and
most importantly act on it.

Speak to your email template designer about the use of
media queries to enable this optimization automatically, or
speak to dotMailer’s own Creative Studio team.

Defining an effective loyalty
content strategy

The decision to leave content strategy to the last section in
this guide is deliberate. Content is the final piece of the puzzle.
Without a clear strategy, a clean, data-rich and permissionbased
email database, and effective segmentation, the best
copywriting, graphics or offers in the world will be wasted.

We cannot stress enough the importance of getting those
initial elements of your program right before you start
creating your loyalty email program content.

Critically you need to establish clear objectives for any email loyalty campaign before you start. Most email
campaigns fall broadly into one of the following categories, and each has different objectives that all contribute
towards increasing loyalty, even though they also require different approaches:

Customer research – finding out more about customer preferences and propensities

Referrals

1. Customer nurture/soft sell

Building customer loyalty starts with the moment you
engage customers.
With the wide acceptance of capturing email addresses
as part of a point of sale transaction, companies can now
build deep and detailed intelligence on their customers
that relates to their demographic and purchase habits, and
potentially provides a goldmine of marketing information.

There are many examples of effective nurturing
approaches, such as:

Loyalty-building offers and points programs

Exclusive offers and promotions

Engagement building user generated content

Invitations to attend customer events

New product news and special offers

Sending out a ‘welcome’ email in response to someone
joining a loyalty scheme is now considered as a mandatory
first engagement action. Many brands also take this
opportunity to ask the recipient to provide more personal
data and information. But, they will most likely want
something in return!

One thing to bear in mind: There may be some
misconception around the value that customers want to
receive from loyalty programs.
In 2012 IBM conducted a study into the reasons that
people gave for signing up to social engagement with
brands.

The survey found that most of the brand managers
believed their consumers were seeking to engage with the
brand and feel some sense of identity and community as a
brand advocate. They ranked purchases and incentives as
the least powerful motivator for digital engagement.
In reality and by contrast, over two-thirds of those
questioned cited the ability to receive offers and incentives
as their primary motivation for signing up!

Clearly if you want to make customers who receive emails
feel special, you need to keep them incentivized, which, as
we discussed earlier, means devising incentives that will
attract and still be realistic.

Perception gap

Consumers’ ranking: The reasons they
interact with companies via social sites

Insight-driven customer
satisfaction

As the Harvard research mentioned (page 4), without
satisfaction you won’t get loyalty, and one of the best
ways to improve customer satisfaction is to ask them what
they didn’t like!
In July 2013 Argos Stores won an ECMOD award for
the way it used information harvested from customer
feedback to turn around the ratings of its ‘Bush’ range of
TVs and improve customer satisfaction.

The TVs in question were scoring review averages of
around 3.5 out of 5 on its website, yet the comments were
generally highly complimentary, with particular praise for
the design, appearance, picture and sound quality.
Emailing customers to find out why their ratings produced
this dichotomy unearthed a very clear objection. Because
the TV remote control had been produced in three shades
of grey, most users found it hard to see the control details
while watching TV, thus diminishing the experience of
using an otherwise brilliant product.

Using online surveying to discover this customer
satisfaction issue and then changing that aspect of the
design led to the ratings climbing steadily to the point
that they now average 4.8 – effectively a 30% increase in
customer satisfaction.
Insurance giant AVIVA takes a similar approach. AVIVA
actively seeks customer feedback from every policyholder
that has made a claim. Those who reply and give a rating
of less than 3.5 are immediately followed up in person by
a customer services representative with the aim of turning
them around and increasing satisfaction.

Given that it takes 8 times as much marketing resource
to convert a new customer as it does to increase loyalty
from an existing one, regular emails to check on customer
satisfaction are a highly cost-effective tool.

Listening to customers and acting on that information is
also one of the most effective ways to increase your Net
Promoter Score. A survey commissioned by BazaarVoice in
July 2013 polled 1500 people
who had submitted
negative feedback
to companies
and found that
after seeing a
brand response
to a negative
a review, 71%
of consumers in
the survey changed
their perception of
the brand. While this survey
covers web reviews, its findings are just as valid for email
marketing – an even more intimate and powerful way of
engaging customers!

One other finding from that report worth noting: the
survey found that being truly responsive meant using
conversational, human language that fits the brand and
avoids “corporate speak.” Thank correspondents for their
comments, whether good or bad, and never use a canned
response. Copying and pasting the same response does not
show a brand is listening; in fact, it suggests the opposite
and is almost as bad as not responding at all.

Research

Customer research remains one
of the most valuable uses for
email, whether as a way of testlaunching
products, identifying
trends and opinions, inviting
reaction to new developments, or
simply finding out what factors are
likely to improve your customers’
perception of your brand.

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dotMailer combines these online survey integration benefits with a unique technology feature that lets marketers create 'branded' online surveys that look and navigate exactly as if they were part of your website.

Referrals

It’s every marketer’s ambition to convert happy customers
into advocates, and email provides a powerful tool for
building referral programs from both marketers’ and
customers’ perspectives. Referral programs give the
customer a chance to share their experiences and views,
which you can use to drive product improvements, as
well as for further marketing activity and generating new
customers.

But perhaps the most attractive aspect of email-based
referrals for marketers is the ability to get happy
customers to spread the word that they are pleased with
your products and services – in effect, to do the hardest
part of your marketing for you.

SKY TV has an ongoing referral program that targets
subscribers with offers to recommend a friend – these can
range from a free upgrade to another service or £75 of
vouchers for use at M&S, Tesco or John Lewis. Subscribers
are reminded of this offer whenever their subscription is
due for renewal, and the fact that it has been one of SKY’s
longest enduring promotions suggests that it is highly
effective!

Online, ‘word-of-mouth marketing’ is one of the
most effective tools in the marketer’s box – Nielsen
reports that 81% of online consumers’ purchase
decisions are influenced by their friends’ social
media posts, and email is a powerful trigger to drive
happy customers to make referrals on your behalf,
including:

Social media sharing – which can be triggered
with embedded Facebook/ Twitter links

Customer reviews and recommendations – a
keystone of Amazon.com’s marketing activities
and that of most online retailers

Testimonials and case studies – Unilever is
perhaps best-known for its ‘Real Women’
campaign that sets out to find ‘real’ women and
share their stories.

User generated content – apart from being
one of the most effective ways to make your
SEO ramp off the scale, using email to drive
special promos where customers are asked to
post videos of themselves using products is a
sure-fire way of giving your customers their 15
minutes of fame!

80% of your company’s future revenue will come
from just 20% of your existing customers.”

- Forbes

How much should you pay
for reviews?

There are two conflicting schools of thought around
incentivizing reviews.
While every product and service will have its ‘ranters and
ravers’ who will willingly share their views with the world,
the challenge for marketers is to get the happy neutrals to
move up the advocacy scale and make their feelings more
public.

Until as recently as 2012 it was common for companies
to offer financial incentives to people to provide reviews,
but the explosion in reviews and the volume of email
activity used by major brands and retailers to drive them
has meant that ‘paid’ reviews have become much less
common.
A 2012 survey by brand advocacy specialists Zuberance
found that out of 1445 consumers that had provided a
review of a product, less than 1% did so in order to receive
an incentive, whereas 50% did so because they had a good
experience.

As we stated earlier – the key to successful loyalty lies in
the level of the customer’s satisfaction.

Measuring return
on investment

A key challenge for marketers is to prove that an email
campaign was ‘worth it’. Showing improvements in
customer loyalty can be difficult, but regular research
and surveys into customer attitudes to your brand allow
you to map improvements in sentiment and match these
to specific campaigns.

Marketing metrics

When linked through to CRM and ecommerce solutions,
the financial return on any email campaign can be
calculated to the last penny, but it is a short-sighted
marketer whose only measure of success is hard revenue.
However building customer loyalty is not about generating
direct revenue from each message.

As a working practice we find that most dotMailer clients
look at a range of factors including:

Open rates

Click through rates

Click-to-open rates

Forwards

Dwell time on landing pages

Replies

Opt-out/unsubscribes

Customer satisfaction, NPS and loyalty metrics

Email is a communication tool. It is the most personal
level of communication available to organizations beyond
actually speaking with a customer, so to get an effective
measure of return on investment, you need to widen the
parameters by which success is defined.

Whichever metrics you choose to measure, it is important
to remember that there really is no industry standard
measure of success, as confirmed by dotMailer client
Sian Allmark, Head of Marketing at Dove Spa. “It’s a
false effort to try and compare your results against an
arbitrary industry benchmark. All you can do is set your
parameters and refine them as each campaign rolls out to
establish what is ‘normal’, ‘good’, and ‘exceptional’ for your
business.”

Sian speaks from experience – the campaign she ran for
Dove Spa’s Strength Within anti-wrinkle supplement
achieved one of the most financially successful results on
record, with a 78% repeat purchase rate.
Now that, by anyone’s yardstick, is outstanding customer
loyalty.

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